EPA’s final renewable fuel quotas more ambitious than proposed

The US Environmental Protection Agency issued final renewable fuel quotas for fiscal 2014, 2015, and 2016, and biomass-based diesel quotas for 2014-17 that are more ambitious than those proposed in June.

The levels are designed to meet Congress’s intent in enacting the federal Renewable Fuel Standard (RFS) while recognizing what Janet McCabe, EPA acting assistant administrator for air and radiation, termed “real world factors.”

McCabe told reporters in a Nov. 30 teleconference, “The biofuel industry is an incredible American success story, and the RFS program has been an important driver of that success—cutting carbon pollution, reducing our dependence on foreign oil, and sparking rural economic development.”

She said, “With today’s final rule, and as Congress intended, EPA is establishing volumes that go beyond historic levels and grow the amount of biofuel in the market over time. Our standards provide for ambitious, achievable growth.”

The announcement quickly drew fire from the American Petroleum Institute and American Fuel & Petrochemical Manufacturers. “Today’s announcement makes clear that, in order to protect consumers, Congress must step in to repeal or significantly reform the RFS,” API Pres. Jack N. Gerard said on Nov. 30. “Members on both sides of the aisle agree this program is a failure, and we are stepping up our call for Congress to act.”

A dysfunctional program

AFPM Pres. Chet Thompson agreed. “For starters, that EPA is just now—on the last day of November—establishing standards for 2014 and 2015 is indicative of just how dysfunctional the program has become,” Thompson said. “While EPA hasn’t suffered consequences from its tardiness, consumers and obligated parties are not so lucky.”

Corn ethanol interests also were critical. “Today’s decision will severely cripple the [RFS] program’s ability to incentivize infrastructure investments that are crucial to break through the so-called blend wall and create a larger market for all biofuels,” Renewable Fuels Association Pres. Bob Dineen said.

EPA acknowledged that a blend wall, representing the maximum amount of ethanol which can be blended to produce E10 gasoline, was reached more than 2 years ago and soon began to issue waivers where needed (OGJ Online, Nov. 15, 2013). McCabe said EPA’s latest quotas would push through that blend wall.

“When Congress set up the RFS, it contemplated there would be an increasing amount of renewable fuels in the overall fuel mix,” McCabe said. “Over time, that means there will be a wider variety of fuels available to the public, which means going beyond the blend wall.”

McCabe conceded that advanced biofuels technologies have not developed as quickly as Congress expected when it significantly expanded the RFS in the 2007 Energy Independence and Security Act. “It can take a while for emerging technologies to get up and running,” she said. “Also, when Congress set the statute up, it looked a number of years into the future and assumed where transportation fuel demand would be. The total amount has been less than anticipated.”

Consumers will decide

The final rule does not mandate any particular use of corn ethanol, McCabe stated. “It’s up to the market how much gets used. That said, this provides an opportunity for a number of fuels to compete in the marketplace, and the consumers will make the final decision,” she said.

Gerard noted, “EPA’s final rule relies on unrealistic increases in sales of higher ethanol fuel blends despite the fact that most cars cannot use them. Motorists have largely rejected these fuels.”

API also is concerned that EPA’s final rule mandates more biodiesel for 2014 and 2015, Gerard said. “Obviously, refiners have already made their compliance decisions for these years. EPA needs to provide the 14 month lead time specifically required by Congress before increasing biodiesel mandates.”

Thompson argued that EPA’s new biomass-based diesel quotas are unlawful because the agency did not provide the required mandatory lead time under the federal Clean Air Act.

“Obligated parties should not have the responsibility to force consumers to use products they either don’t want or that are incompatible with their cars, boats, and motor equipment,” Thompson said. “It’s also unclear how EPA can simultaneously recognize the E10 blend wall and yet establish requirements that exceed those constraints. This decision is hard to view as anything other than an attempt by EPA to placate the biofuels lobby.”

Contact Nick Snow at nicks@pennwell.com.

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